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Consumer Finance Insights
August 10, 2018

CFPB Settles Payday Lending Case for $14 Million

​On August 10, the Consumer Financial Protection Bureau (CFPB) announced a settlement entered in the Western District of Missouri regarding the alleged unlawful origination and servicing of online payday loans.  The Bureau filed suit against two individual and twenty allegedly related entities controlled by those individuals, asserting violations of the Consumer Financial Protection Act (CFPA), 12 U.S.C. §§ 5531(a), 5536(a), 5564(a), and 5565, Truth in Lending Act (TILA), 15 U.S.C. §§ 1601-1666j, and Electronic Fund Transfer Act (EFTA), 15 U.S.C. §§ 1693-1693r.

Specifically, the CFPB alleged that the defendants obtained consumers’ sensitive, personal information from third-party brokers and used that information to access consumers’ bank accounts without authorization.  Defendants allegedly deposited loans into the affected consumers’ bank accounts, and then debited biweekly “finance charges.”  The CFPB alleged that, in most cases, consumers never saw loan agreements and were unaware of the activity.

Pursuant to the consent order, the defendants are prohibited from offering, originating, or collecting on any loan to consumers.  The order imposes a judgment requiring defendants to pay $69 million in redress, but suspends that requirement due to their inability to pay.  Instead, defendants will forfeit $14 million in assets and pay a $1 civil money penalty.

The post CFPB Settles Payday Lending Case for $14 Million appeared first on Consumer Finance Insights (CFI).